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Cryptocurrency trading is notoriously volatile with price swings of 20%+ seen in times of heavy turbulence. And in most of these cases, all cryptocurrencies move in the same direction, either sharply up or down, leaving traders exposed to market risk. And while cryptocurrencies are different with specific news and announcements also major drivers for market moves, general market sentiment continues to be the main theme of the cryptocurrency space.

One way to reduce market sentiment risk is by trading two cryptocurrencies against each other – a spread trade. A look at the latest Ether (ETH)/Bitcoin (BTC) spread shows that ETH has been outperforming BTC over the last 6 weeks, moving up from around 0.0580 to a current level of 0.0832, a rise of just over 43%. The basis behind this move is that traders believe that ETH has more value than BTC as a company or network, while market positioning and sentiment will also have played a part in the move.

A look at the latest IG Client Sentiment Report shows that customers are 73.6% net-long of Bitcoin and 91.0% net-long of Ether. While this is a contrarian indicator – bearish for both – daily and weekly changes in net-longs and net-shorts impact on overall retail sentiment.

The strong uptrend remains in place, while on this four-hour chart the price remains above the 200-day moving average, a bullish sign. At the bottom of the chart the RSI indicator is around 46, just above the four-recent oversold reversal signals at 39.

About your FOREX.com Demo Account

A demo account is intended to familiarize you with the tools and features of our trading platforms and to facilitate the testing of trading strategies in a risk-free environment. Results achieved on the demo account are hypothetical and no representation is made that any account will or is likely to achieve actual profits or losses similar to those achieved in the demo account. Conditions in the demo account cannot always reasonably reflect all of the market conditions that may affect pricing and execution in a live trading environment.